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AGENDA ITEM SUMMARY ITEM NUMBER: 23
DATE: April 2Q 1999
FORT COLLINS CITY COUNCIL STAFF:
Mike Smith
SUBJECT:
First Reading of Ordinance No. 59, 1999,Amending Chapter 26,Article VI,Division 4 of the City
Code Regarding Sale of Energy Generated from a Renewable Resource.
RECOMMENDATION:
Staff recommends adoption of the Ordinance on First Reading.
EXECUTIVE SUMMARY:
Each electric rate schedule contains a"Renewable resource" clause which permits the Utility to sell
wind energy at a premium price in accordance with a special services agreement between the Utility
and the customer. The clause, adopted in November 1996, sets the premium at an additional two
cents per kilowatt-hour. This Ordinance revises each"Renewable resource" clause to eliminate the
specific premium amount. If approved, the premium amount will be based on the Utility's cost of
providing wind energy and will be specified in the special services agreement.The cost of providing
wind energy is now estimated at a premium of 2.5 cents per kilowatt-hour. The Ordinance also
contains a housekeeping change to the "Special services" clause of each rate schedule to clarify that
rates, fees and charges set through special services agreements must satisfy the applicable cost-of-
service criteria required to be followed by the Charter for setting such rates, fees and charges.
BACKGROUND:
The Wind Power Pilot Program was initiated in 1996 by obtaining customer commitments to
purchase wind energy at a premium of two cents per kilowatt-hour. This was the best estimate of
costs at that time. The participating customers, "wind power pioneers" signed a three-year special
services agreement for the wind energy based on the planned duration of the pilot program. After
obtaining the commitments,the City contracted with Platte River Power Authority to build two 600-
kilowatt wind turbines. The turbines went on line in April, 1998 and participating customers were
billed for the wind premium beginning May 1. Since the implementation of the pilot program, the
cost of providing wind power to customers has proven to be somewhat greater than two cents per
kilowatt-hour. The utility, however, is committed to honoring the existing special services
agreements at the two-cent premium for the three-year pilot period.
l
Utility is now contracting with Platte River Power Authority for two and a half additional wind
nes. Existing wind power subscribers are using more energy than the original two turbines can
uce, so the half turbine will be dedicated to needs of these existing wind customers. The wind
gy from another of the new turbines has been contracted for by New Belgium Brewery. The
ty will seek new customer commitments for the remaining new turbine. The new renewable
DATE: April20, 1999 2 ITEM NUMBER: 2'i
resource special services agreements will be for approximately 2.5 cents per kWh,which will also
be the price for the"pioneer"subscribers after the original three-year pilot special services agreement
term is up. This price may change based on actual costs of the wind energy.
The Ordinance will change the "Renewable resource" clause to provide that the wind power
premium be specified in the special services agreement between the Utility and wind power
customers instead of being specified in the Code. This will allow the "pioneer" wind customers to
continue paying the 2 cent premium during the remainder of the three-year pilot while allowing new
customers to subscribe for wind at the "going" rate.
In addition, the Ordinance revises the "Special services" clause in each electric rate schedule to
clarify that the rates, fees and charges established in special services agreement must satisfy the
applicable cost-of-service criteria that are set forth in Section 6,Article XII of the City Charter.
ORDINANCE NO. 59, 1999
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING CHAPTER 26, ARTICLE VI, DIVISION 4 OF THE
CODE OF THE CITY REGARDING SALE OF ENERGY
GENERATED FROM A RENEWABLE RESOURCE
WHEREAS, the City initiated the Wind Power Pilot Program in 1996; and
WHEREAS,at that time,the cost of the wind energy was estimated at two cents per kilowatt-
hour; and
WHEREAS,those customers who subscribed to the pilot program entered into a three-year
special services agreement with the Utility to pay a premium of two cents a kilowatt-hour for the
wind energy; and
WHEREAS,additional customers are interested in purchasing wind energy and more wind
turbines will be purchased; and
WHEREAS,the cost of providing the service from the original two wind turbines and future
turbines is now estimated at 2.5 cents per kilowatt-hour; and
• WHEREAS,the utility will continue to honor the two cent premium specified in the existing
special services agreements during the three-year pilot; and
WHEREAS, the future wind power customers will also be required to enter into a special
services agreement with the Utility for purchasing wind energy; and
WHEREAS, these future special service agreements for wind energy will specify the
premium charge at the full estimated cost of the wind energy; and
WHEREAS,the terms and conditions of such special services agreement shall be established
by the General Manager of the Utility Services subject to the cost-of-service criteria that are required
by Section 6 of Article XII of the City Charter to be followed in setting the rates, fees and charges
to be paid by customers for electric services.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That paragraphs (d) of Section 26-464, (d) of Section 26-465, (d)of Section
26-466, (d) of Section 26-467, (d)of Section 26-468, (e) of Section 26-469, and(d)of Section 26-
472 of the Code of the City of Fort Collins are hereby amended to read as follows:
Renewable resource. Energy generated by the power of wind may be available at a
premium price in accordance
with the provisions of a special services agreement between the utility and the
customer,.as such agreements are authorized in this section,;
Section2. That paragraphs(i)of Section 26-464,0)of Section 26-465,0)of Section 26-
466,(k)of Section 26-467,(m)of Section 26-468,(n)of Section 26-469,and(n)of Section 26-472
of the Code of the City of Fort Collins are hereby amended to read as follows:
Special services. The electric utility is authorized to provide special services and
capabilities which are beyond those required for basic service, provided that such
special services and capabilities are described in a written agreement between the
utility and the customer, which agreement shall also set forth the utility charges
associated with the provision of such special services and capabilities. The Director
shall establish the iates,5feesx charges and payment terms for the provision of such
special services and capabilities. In settingtTierates;fees''and chazpes to,be part Tiy
the customer under a speeial`ser ces agreemen;the D ectb shall se th0Ox Wan
atribuntthatsatrsfies tle�dppl�cable;�st of sery�c ecritenacan�a�ned m;Secttan6;of
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Introduced and considered favorably on first reading and ordered published this 20th day of
April, A.D. 1999, and to be presented for final passage on the 4th day of May, A.D. 1999.
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading this 4th day of May,A.D. 1999.
Mayor
ATTEST:
City Clerk